Kathmandu, May 26: The Nepal Rastra Bank, the central bank of the country, in its third quarterly review of the monetary policy for the current fiscal year 2081/82, has mandated that banks and financial institutions maintain a minimum daily liquidity of 90 percent. Additionally, the risk weight for share collateral loans has been reduced.
The central bank, in its third quarterly review of monetary policy, has kept the policy rate, deposit collection rate, and bank rate unchanged.
“Based on the internal economic and financial situation and outlook, the direction of monetary policy has been cautiously balanced. The policy rate remains at the current five percent, the lower limit of the deposit collection rate at three percent, and the upper limit of the bank rate under the interest rate corridor at six and a half percent,” the central bank stated in its review. “The current mandatory cash reserve and statutory liquidity ratio have been maintained. Considering the current liquidity condition of the financial system and the recent improvements in open market operations, banks and financial institutions will be required to maintain a minimum mandatory cash reserve of 90 percent daily.”
The risk weight of existing share-backed loans has also been reduced. Currently, the risk weight of loans backed by shares is being reduced from 125 percent to 100 percent, as stated by the central bank. The central bank is also planning to introduce some new regulations for legal reforms.
With the aim of improving the investment environment, it has been announced that the “Nepal Rastra Bank Foreign Investment and Foreign Loan Management Regulations, 2021” will be issued, incorporating the provisions of the latest amendments to the Foreign Exchange (Regulation) Act, 2019 and the Foreign Investment and Technology Transfer Act, 2018. Similarly, the Nepal Rastra Bank has stated that it will formulate and issue the procedure for certifying dishonor of cheques as per the amendment of the Banking Offense and Punishment Act, 2007.
People’s News Monitoring Service.
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